Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University)
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Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University) Financial Statements and Independent Auditors’ Reports June 30, 2009 and 2008 Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University) Contents Page INDEPENDENT AUDITORS’ REPORT 2 MANAGEMENT’S DISCUSSION AND ANALYSIS 3‐8 FINANCIAL STATEMENTS: Statements of net assets 9 Statements of revenues, expenses, and changes in net assets 10 Statements of cash flows 11 Notes to financial statements 12‐21 SUPPLEMENTAL INFORMATION: Independent auditors’ report on supplemental information 23 Schedule of revenues, expenses, and changes in net assets on a departmental basis 24 Schedule of functional expenses 25 Bellevue INDEPENDENT AUDITORS’ REPORT Boise Grandview Moses Lake Board of Trustees Omak Washington State University Othello Pullman, Washington Quincy Spokane We have audited the accompanying statements of net assets of Northwest Public Radio and Tri-Cities Television (a public telecommunications system operated by Washington State University) (the Walla Walla System) as of June 30, 2009 and 2008, and the related statements of revenues, expenses, and changes in net assets and cash flows for the years then ended. These financial statements are the responsibility of the System’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe our audits provide a reasonable basis for our opinion. As discussed in note 1, the accompanying financial statements present only the financial position, changes in net assets, and cash flows of the System. They do not purport to, and do not, present fairly the financial position, changes in net assets, and cash flows of Washington State University in conformity with accounting principles generally accepted in the United States of America. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Northwest Public Radio and Television as of June 30, 2009 and 2008, and the changes in its net assets and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. The management’s discussion and analysis on pages 3 through 8 is not a required part of the basic financial statements but is supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit the information and express no opinion on it. Spokane, Washington December 1, 2009 2 Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University) Management’s Discussion and Analysis Introduction The following discussion and analysis provides an overview of the financial position and operations of Northwest Public Radio and KWSU/KTNW Public Television (the “System”) for the years ended June 30, 2009 and 2008. This discussion has been prepared by management, and it should be read in conjunction with the System’s financial statements and accompanying notes which follow this section. Northwest Public Radio and KWSU/KTNW Public Television is a noncommercial educational radio and television system licensed to Washington State University (WSU) in Pullman, Washington. The System’s financial statements include the accounts for its thirteen public radio stations, two public television stations, and Academic Media Services for which broadcast, budget, accounting, and certain grant purposes are separately identified. The System does share facilities and personnel and is constituent organizational departments of WSU. These financial statements present only the above‐described portion of the activities of WSU, and are not intended to represent the financial position, results of operations, or changes in net assets of WSU taken as a whole. WSU is a public university in the state of Washington, governed by a ten‐member Board of Regents appointed by the State Governor. The complete financial statements of WSU may be found at http://www.wsu.edu/~genacct/finstat.htm. Financial Highlights Overall, the System’s financial position improved during the year ended June 30, 2009: • Assets decreased by $299,915 largely due to a reduction in grants receivable and the purchase of capitalized equipment in connection with major initiatives to upgrade radio and television operations to digital technology. These purchases were funded by capital grants. • Liabilities decreased by $562,092 primarily due to a decrease in deferred grant revenue as a result of the completion of equipment grant projects. • Net assets, which represent the residual of assets after deducting liabilities, increased by $262,177. Other significant changes to operations were as follows: • Revenues from all sources totaled $8,637,300, a decrease of $1,462,321 from fiscal year 2008. Most of this decrease can be attributed to less nonoperating grant revenue for the purchase of equipment. • Expenses totaled $8,375,123, a decrease of $842,722. The most significant areas of decrease were due to an overall decrease in expenditures attributable to the economic downturn and a reduction in noncapitalized operating equipment funded with appropriations from WSU. 3 Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University) Management’s Discussion and Analysis Financial Highlights (continued) • Capital additions, net of depreciation and disposals, totaled ($349,358). • Long‐term debt, net of current maturities, increased by $18,843. Financing was provided by the state of Washington to fund a portion of the local match required by federal equipment grants more fully described in note 7 of the notes to financial statements contained herein. Presentation of the Financial Statements The System’s financial report includes three primary financial statements: The statement of net assets; the statement of revenues, expenses, and changes in net assets; and the statement of cash flows. These financial statements are prepared in accordance with Governmental Accounting Standards Board (GASB) principles and focus on the System as a whole. Condensed Financial Information and Analysis Financial Position – Statement of Net Assets The statement of net assets is a snapshot of the System’s financial position at year end. It lists the assets (economic resources), liabilities (creditors’ claims) and net assets (residual interest in assets after paying creditors) based on end‐of‐year data. Assets are classified as current, noncurrent, or capital. Current assets are expected to benefit the System within 12 months and include cash, accounts receivable, inventories, prepaid expenses, and investments that can easily be converted to cash to meet operating expenses. Noncurrent assets are endowment fund assets; and capital assets include equipment with a cost exceeding $5,000 and having a useful life exceeding one year. Capital assets are reported net of accumulated depreciation. Liabilities are classified as current or noncurrent. Current liabilities are claims that are due and payable within 12 months, and include payroll and benefits, amounts payable to suppliers for goods and services received and debt principal payments due within one year. Noncurrent liabilities are obligations payable beyond one year. 4 Northwest Public Radio and KWSU/KTNW Public Television (A Public Telecommunications System Operated by Washington State University) Management’s Discussion and Analysis Condensed Financial Information and Analysis (continued) Financial Position – Statement of Net Assets (continued) Below is a condensed view of the statement of net assets as of June 30, 2009, 2008, and 2007: (Dollars in Thousands) 2009 2008 2007 Assets: Current assets$ 1,924 $ 1,858 $ 2,238 Noncurrent assets 2,147 2,497 1,412 Other assets 47 63 66 Total assets$ 4,118 $ 4,418 $ 3,716 Liabilities: Current liabilities$ 1,053 1,634$ 1,966 Noncurrent liabilities 251 233 81 Total liabilities 1,304 1,867 2,047 Net Assets: Invested in capital assets 2,148 2,496 1,412 Unrestricted 666 55 257 Total net assets 2,814 2,551 1,669 Total liabilities and net assets$ 4,118 $ 4,418 $ 3,716 Statement of Revenues, Expenses, and Changes in Net Assets The statement of revenues, expenses, and changes in net assets reports the System’s results of operations. In accordance with GASB reporting principles, revenues and expenses are classified as operating, nonoperating or other. In general, operating revenues are those received in the form of Community Service grants funded by the Corporation for Public Broadcasting, as well as miscellaneous